Do not overlook stock options in divorce

To resolve a divorce, all marital property and debt has to be divided in a just manner, when considering all relevant factors, in a state where equitable jurisdiction is the law. In Missouri, Illinois and Kansas, equitable distribution is the standard.

To divide all marital property and debt in a just manner, the first step is determining what marital and property and debt exists. In some jurisdictions, there is mandatory disclosures required where the parties are to list their marital property and debt.

One often overlooked martial asset that is sometimes out there are stock options. For many parties who work in a corporate environment, they may be awarded stock options as part of their employment. Stock options can be vested or non-vested.

The difference between whether a stock option is vested or non-vested is really the second step after realizing they exist. If they are non-vested, they are generally do not constitute a property interest subject to division in a divorce.

However, if they are vested stock options, then the question is whether they were vested during the marriage. If they were vested during the marriage, they are generally considered marital property subject to division in divorce. But in trying to divide stock options, it is often vital to determine the value.

There are basically three approaches to valuation and division: (1) net present value, (2) deferred distribution, and (3) reserve jurisdiction. The present valuation method is generally preferred where that is a possibility. This allows the court to render an opinion immediately about the division of the stock options.

Bear in mind as well that some stock options are not transferable. This means that they stock options cannot be divided, but they can be offset by an award from some other marital asset of comparable value.

Regardless of these complexities, it is vital that a party inquire about the existence of stock options. In some instances, a party might not even be aware that they have them. In other instances, the party that has them might know about them, but the other spouse is not aware.

In circumstances like this, it is important to conduct appropriate discovery to determine whether they exist. In some cases, they can have significant value.

If you are going through a divorce where stock options might exist, you can contact Stange Law Firm, PC at 1-855-805-0595.